Transcription

1 NATIONAL ASSOCIATION OF REALTORS RESEARCH DIVISION COMMERCIAL REAL ESTATE Commercial Fundamentals Moderate at the Start of 2014 George Ratiu Director, Quantitative & Commercial Research The economy proved resilient during 2013, despite sequestration, government shutdown, regulatory changes and other impacts. Based on BEA s preliminary estimates, gross domestic product advanced at a 1.9 percent annual rate in 2013, supported by a cautiously optimistic consumer and hedging businesses. The third quarter provided the largest boost, with growth of 4.1 percent, followed by a surprisingly robust fourth quarter, which recorded 3.2 percent annual growth rate. Consumer spending remained positive throughout the year, surging at year-end 3.3 percent and providing much-needed tail wind to the economic balance. Consumers upped their spending of goods, with durables rising 7.2 percent for the year, as well as services. In a sign of improving confidence, purchases of recreational vehicles and goods rose 10.3 percent during the year, adding to the 5.1 percent growth rate from automobile purchases. With a rebound in residential markets and house prices, consumers were more willing to spend on remodeling and furnishings. Consumption of furniture and household equipment rose at an annual rate of 6.3 percent in After solid investments during the second and third quarters, business investments tapered at the end of the year. However, the government shutdown did not prove a stumbling block, as businesses increased investments by 3.8 percent in the fourth quarter. For all of 2013, business investments advanced at a rate of 2.6 percent moderate, but fitting the cautious approach to impending regulations, government budgetary wrangling and fiscal uncertainty. Business spending on structures rose 1.3 percent during the year. Spending on equipment increased 2.9 percent while investments in intellectual property were up 3.1 percent for the year. In relation to corporate profits, however, business spending is still underperforming, possibly due to less robust confidence among top managers International trade added strong lift to GDP in the latter half of the year. Exports advanced 11.4 percent in the fourth quarter, as imports gained 1.0 percent in the same period. The end result was a shrinking trade deficit. With rising import and export activity, the industrial sector welcomed the increase in traffic through ports and warehouses, posting noticeable improvement in fundamentals. (continued on page 2) GDP (% Annual Chg) Q Q Q Q Q4 Source: BEA

2 (continued from page 1) Government spending, a major contributor to GDP, closed the year in the negative, declining at a 2.2 percent annual rate. The drag came mostly from the federal level, which cut spending by 5.1 percent during the year, as the government reduced defense spending as part of sequestration. State and local governments spending was curtailed by 0.2 percent, the smallest post-recession decline. With improving residential markets and stabilizing employment, state and localities should be in a much better fiscal position in The economic gains were evident in other indicators of activity. Financial markets advanced at double-digit rates during New homes sales rose 16.7 percent over the year. Existing home sales totaled 5.1 million units, an 8.9 percent increase year-over-year, while home prices advanced 12.0 percent from The Institute for Supply Management indexes for manufacturing and services rose 0.6 percent on a yearly basis. As consumer confidence rose 9.2 percent over 2013, sales of motor vehicles surpassed the 15 million mark, not reached since Payroll employment gained a net 2.2 million new jobs during the 12-month period ending in December. Service industries were the main beneficiaries, with 1.9 million net new jobs. Professional and business services accounted for 637,000 new positions, followed by retail trade, which accounted for 381,000 new jobs. Education and health services were the other major job creators adding a net 327,000 new jobs during Over the year, the unemployment rate declined from 7.9 percent in January to 6.7 percent in December. The GDP outlook for 2014 forecasts a stronger annual growth rate of 2.5 percent. Payroll employment is expected to rise by 2.0 to 2.2 million. The unemployment rate could average 6.5 percent for the year Annual Growth Rate, % Real GDP Nonfarm Payroll Employment Consumer Prices Level Consumer Confidence Percent Unemployment Fed Funds Rate Month T-bill Rate Corporate Aaa Bond Yield Year Gov t Bond Year Gov t Bond Source: National Association of REALTORS Commercial Real Estate Sales of major properties (over $2.5M) advanced 19 percent year-over-year in 2013, totaling $355.4 billion, based on Real Capital Analytics (RCA) data. The year marked a noticeable rise in most markets across the U.S., including secondary and tertiary markets which had slower rebounds. Investors found favorable economic conditions in these markets and pursued the higher yields offered by performing properties. Apartment investments totaled $103.5 billion in 2013, followed closely by office transactions, accounting for $101.5 billion. Sales volume advanced at double-digit rates for all property types except retail. (continued on page 3) 2

3 (continued from page 2) The fourth quarter of the year proved particularly strong, with $112.9 billion in closed transactions, as prices accelerated. For the year, prices advanced 15 percent across the country, according to RCA s Commercial Property Price Index. Retail investments posted the steepest price gains, rising 23 percent on a yearly basis, followed by a tie between office and hotel property prices, which rose 17 percent. Prices for apartments increased 12 percent in 2013, while those for industrial buildings rose 5 percent. Cap rates averaged 6.9 percent in 2013, a 4 basis point increase from Apartments recorded the lowest average cap rate for the year, at 6.2 percent, posting a 4 basis point increase year-over-year. Office cap rates averaged 6.9 percent in 2013, a 22 basis point compression from the prior year. Retail cap rates averaged 7 percent, declining 20 basis points on a yearly basis. NATIONAL 2.53% OFFICE 2.34% INDUSTRIAL 2.93% RETAIL 2.66% APARTMENT 2.48% Source: National Council of Real Estate Investment Fiduciaries For lower priced properties (below $2.5M), sales volume advanced 8 percent on a yearly basis, while prices increased 1 percent year-over-year, based on survey data from the National Association of REALTORS. Cap rates averaged 8.7 percent in the fourth quarter, a 50 basis point decline from the third quarter. 3

9 The Research Division of the National Association of REALTORS monitors and analyzes monthly and quarterly economic indicators, including retail sales, industrial production, producer price index, gross domestic product and employment data which impact commercial markets over time. In addition, the Research Division provides several products covering commercial real estate: Commercial Real Estate Quarterly Market Survey Commercial Real Estate Lending Survey Commercial Member Profile CCIM Quarterly Market Trends Expectations and Market Realities in Real Estate 2014 If you have questions or comments regarding this report or any other commercial real estate research, please contact George Ratiu, Director, Quantitative & Commercial Research, at Although the information presented in this report has been obtained from reliable sources, NAR does not guarantee its accuracy, and such information may be incomplete. This report is for information purposes only. All opinions, assumptions and estimates constitute NAR s judgment as of the date of this publication and are subject to change and evolving events. Actual results may vary from forecast results. For more information, please visit us: REALTOR.org/research-and-statistics economistsoutlook.blogs.realtor.org twitter.com/#!/nar_research Copyright 2014 NATIONAL ASSOCIATION OF REALTORS. Reproduction, reprinting or retransmission in any form is prohibited without written permission. For questions regarding this matter please 500 New Jersey Avenue, NW Washington, DC

Nursing Home Costs Average $181 Per Day in U.S. 2003 MetLife Market Survey Reports Costs Vary Widely from Region to Region The average nursing home cost in the United States is $181 per day for a private

The MetLife Market Survey of Assisted Living Costs October 2005 MetLife Mature Market Institute The MetLife Mature Market Institute is the company s information and policy resource center on issues related

2015 U.S. TOURISM QUALITY PERFORMANCE REPORT RESONANCE REPORT RESONANCE CONSULTANCY CREATES DEVELOPMENT STRATEGIES, PLANS, AND BRANDS THAT SHAPE THE FUTURE OF PLACES AROUND THE WORLD. Our team has advised

The Housing Downturn in the United States 2009 First Quarter Update May 2009 TABLE OF CONTENTS The Housing Downturn in the United States: 2009 First Quarter Update Introduction The Housing Downturn: National

The MetLife Market Survey of Nursing Home & Home Care Costs September 2005 MetLife Mature Market Institute The MetLife Mature Market Institute is the company s information and policy resource center on

EEOC DISTRICT, FIELD, AREA AND LOCAL OFFICES The field offices of the Equal Employment Opportunity Commission are managed by the Office of Field Programs. There are four types of field offices: district,

CBRE Cap Rate SURVEY A CBRE RESEARCH Publication United States Overview Key National Observations Commercial real estate in the U.S. continues to be very attractive. The investment landscape also remains

4th Quarter 2011 On December 13, 2011, Delta Air Lines and US Airways announced their agreement to transfer takeoff and landing rights between New York s LaGuardia and Washington D.C. s Reagan National

The data in this chart was compiled from the physician fee schedule information posted on the CMS website as of January 2014. CPT codes and descriptions are copyright 2012 American Medical Association.

How much are teachers really paid? A Nationwide Analysis of Teacher Pay September 2014 How much are teachers really paid? A Nationwide Analysis of Teacher Pay by: Pamela Villarreal Senior Fellow at the

Government of the District of Columbia Natwar M. Gandhi Chief Financial Officer Tax Rates and Tax Burdens In The District of Columbia - A Nationwide Comparison 2004 Issued August 2005 Tax Rates And Tax

On the following pages you will find addresses for: Dept. of Justice Immigration Courts AND Dept. of Homeland Security Offices of Chief Counsel (OCC) DISCLAIMER: The most current addresses for DOJ Immigration

RATES BY ASSET MAY 2013 O V E R V I E W With the firming of the US economy, C&W has seen investors start to gradually move up the risk-reward spectrum. After having been focused primarily on core assets

EMPLOYEE BENEFITS ALERT February 2008 Issue 126 FMLA AMENDED TO PROVIDE LEAVE TO MILITARY FAMILIES The Family and Medical Leave Act (FMLA) now grants FMLA leave rights in two additional circumstances that

DRAFT - Duke Alumni Association - DRAFT Support for and Expectation of Regional Alumni Groups Group A Co- Chairs and executive Hold at least four board meetings per Hold at least one open board meeting

Multi and Single Family Housing: Connected more than you think NMHC Conference Boston, May 15, 2013 William C. Wheaton Professor, MIT Consultant, CBRE Econometric Advisors Global Research and Consulting

U.S. Real Estate Markets: by the numbers NAREIM Spring Executive Officers Meeting March 18, 2013 U.S. sales transaction volume growth likely slowed from 60 percent+ in 2011 to close to 30 percent for 2012

Memphis Light, Gas and Water 2010 Utility Bill Comparisons for Selected U.S. Cities Electricity Natural Gas Water Wastewater The information in this book has been compiled to ensure maximum accuracy at

Cornell Law School February 2014 Public Interest Low Income Protection Plan INTRODUCTION A large number of Cornell Law School students graduate with high educational debts. Many feel that they must obtain

School Desegregation, School Choice and Changes in Residential Location Patterns by Race By Nathaniel Baum-Snow and Byron F. Lutz Web Appendix Data Appendix Our sample is comprised of the 92 metropolitan

American College of Emergency Physicians Military Trauma Cares Learning Health System and its Translation to the Civilian Sector Craig Manifold, DO FACEP Julio Lairet, DO FACEP 18 May 2015 Institute of

STATE OF THE U.S. LODGING INDUSTRY OPERATING AT THE PEAK JUNE 22, 2016 Robert Mandelbaum Director of Research Information Services Hotels Americas Research MUCH TO THINK ABOUT WHY BE HAPPY? HIGH OCCUPANCY

THE COST OF OPERATING A DISTRIBUTION WAREHOUSE DETAILED IN REPORT A new 2010 Report compares the cost of operating a typical distribution warehouse in 72 U.S locations. is a registered trademark of The

Cycle Monitor Real Estate Market Cycles Fourth Quarter 0 Analysis February 0 Physical Market Cycle Analysis of All Five Major Property Types in More Than 0 MSAs. U.S. GDP growth of.% was more than double

COLLABORATE Service Agreement COLLABORATE Service Agreement THIS SERVICE AGREEMENT ( AGREEMENT ) IS MADE BETWEEN THE END USER CUSTOMER ( CUSTOMER, END USER OR YOU ) AND CLEARONE COMMUNITIONS I. ( CLEARONE

University of Alabama School of 206 Match Results by PGY Location Institution * City * State* Program * Count All Children s Hospital St. Petersburg FL Baptist Health System Birmingham AL General Surgery

Demographia United States Central Business Districts (Downtowns) With Data for Selected Additional Employment Areas 3d Edition March 2014 Data from CTPP 2006-10 Demographia United States Central Business

The table below lists the licensure requirements for already-licensed PTs and PTAs applying for licensure in another jurisdiction. Summary Number of jurisdictions requiring license from: license was ever

SANS 2017 s Overview As the leading organization in information, network, and computer security training, the SANS Institute is known for providing intensive, immersion training courses designed to help

Regional Electricity Forecasting presented to Michigan Forum on Economic Regulatory Policy January 29, 2010 presented by Doug Gotham State Utility Forecasting Group State Utility Forecasting Group Began

MLGW s Average Residential Utility Bill Ranks the Lowest Each year, MLGW strives to deliver the highest quality service at the lowest possible rates. One way that we measure our performance is to examine

Top 50 Metropolitan Statistical Areas of the United States of America In 2007, 50.1% of Americans lived in the 40 most populous Metropolitan Statistical Areas. This made the Jacksonville, FL the median

Done Deal. 2014 Big Impact. BUILDING BUSINESS ONE DEAL AT A TIME PNC BUSINESS CREDIT UK BY THE NUMBERS 70+ 1B+ 30+ 0.5B+ Number of deals in 4 years Commitments under management Private equity relationships

Overview The housing market is finally showing signs of life, with many metropolitan areas having hit the elusive bottom and seeing home value appreciation, however negative equity remains a drag on the